The ECommerce Environment of Singapore

The Republic of Singapore is located in southeast Asia, south of Malaysia and northwest of Indonesia. The island measures a total of 637 square kilometers with a coastline 193 kilometers long. Singapore is generally comprised of lowland areas with a central plateau in the middle of the island. Its elevation ranges from the Bukit Timah, (166 m.), to the Singapore Strait which is at sea level. Its climate is tropical and wet. Precipitation occurs on 40% of all days, (70% of days in April). Singapore’s two biggest natural recourses are its fishing industry, and its deep water ports. Singapore is also a focal point for most Southeast Asian sea routes.

Singapore was originally settled by Great Britain in 1819 as a port of call. The British used Singapore to extend their territories in Indonesia. It remained under British rule until 1941 when Japan bombed and captured Singapore. After three years of Japanese rule, British forces returned to the island. By this time Singapore was longing for self-government. Singapore realized its need for independence in 1959 holding its first general election. The new, independent Singapore was voted into the United Nations in 1965. On December 22, 1965, Singapore became a republic electing Yusof bin Ishak as its first president.

In Singapore’s short life as a republic, it has developed a sound infrastructure. In the way of transportation, Singapore has a total of 105 kilometers of railways used for commercial and personal transportation. It has also built over 3,000 kilometers of highways, 2,936 of which are paved. Singapore also boasts a 67 kilometer mass transit system with 42 stations. The mass transit system is the preferred means of travel in Singapore due to the fact that only one of every ten people own an automobile. Singapore produces 28 billion kilowatts of electricity annually. One hundred percent of Singapore’s electricity is produced by means of fossil fuel. An estimated 97% of all residents live in households with electricity and running water. Singapore’s leading industries include: electronics, petroleum refining, oil drilling equipment, rubber products and rubber processing, processed food and beverages, ship repair, entrepot trade, biotechnology, and financial services.

Technological Infrastructure for E-commerce
Singapore has a business environment that is conducive to the support of the E-commerce environment. The E-commerce environment consists of the physical internet network, components, and internet services. The environment also includes a collection of supports and incentives to assist and promote the on-line community.

Approximately Ninety-two percent of adults aged 18 to 55 years old are aware of the Internet. About one third (32%) of the total population have used the internet. This gives Singapore roughly 667,000 adult internet users. However, only 13% of internet users have ever made online purchases. When surveyed only 21% of internet users were aware that these services existed. The bulk of the population uses the internet primarily for information searches and electronic mail (38% and 30% respectively)
In order to develop, E-businesses need an operating environment including network services, payment services, and trust systems. The information technology industry in Singapore has been working with the government to develop online payment systems, security systems, directory services, and other E-commerce services essential to a developing online industry.

Singapore has a 45 Mbps (Megabytes per second) direct connection the US Internet system. The Singapore Telecom Internet Exchange (STIX) is an Asian-Pacific Rim internet hub connecting 15 countries with sub-marine fiber optic cables. The STIX boasts a 34 Mbps connection and provides high-speed, quality internet service to corporate users and internet service providers. Other service providers such as Pacific internet and Cyberway provide a high bandwidth connection to Japan and direct most of the regional internet traffic.

Pro-business and E-business regulations are vital to the growth of E-commerce. The government of Singapore has committed itself to creating an on-line environment of certainty, predictability, and trust so internet companies feel secure in conducting online business. In 1997 the Evidence Act was amended to include electronic records as admissible evidence in courts. In July of 1998 the ETA (Electronic Transactions Act) was created. The ETA provides a legal foundation for collecting electronic signatures. This provides certainty and validity to contracts formed on-line. Singapore’s government has also taken steps to protect on-line knowledge and intellectual works. As of January of 1999, Singapore’s copyright laws have been amended to comply with major IPR regulations such as the WTO TRIPS agreement, and the Berne Convention. The government has also taken steps to encourage industry self-regulation in the areas of consumer protection and privacy.

The ability to identify and trust parties on the internet is a problem affecting any internet transaction. Netrust Pte Ltd has been created to solve this problem. Using digital certificates and signatures, Netrust has formed a digital trust system making Singapore’s internet transactions secure. Companies in Singapore have created several online payment methods. Consumers can now make online purchases ranging from a few cents to $500 using a NETS C-ONE prepaid cash card. Companies such as Secure-Sockets Layer offer encrypted channels for online credit card payments.

The government of Singapore is involved in an ongoing effort to standardize services necessary for E-commerce. The National Information Infrastructure Standards Technical Committee is researching the areas of networking, information sources and exchange, security, and electronic mail and directory in an effort to create standards for E-commerce facilities.

Singapore’s current economic conditions are conducive to supporting a growing E-commerce industry. Although the unemployment rate increased slightly (1% increase), Singapore’s Gross Domestic Product rose considerably (5% increase) from 1998 to 1999. While the GDP has increased, the inflation rate has been negative or zero (-.3 and 0 in 98 and 99 respectively). These factors coupled with a growing exchange rate against neighboring countries are expected to lead to an increase in total consumption. As internet awareness and usage increase a higher percentage of the growing consumption of Singapore will consist of online purchases.

In 1998 there were only 198,733 internet users in Singapore. It is estimated that by 2001 there will be over 1.3 million users. This spike in internet usage coupled with the advent of new technology is expected to sharply increase the amount of E-business. In 1998 E-commerce in Singapore accounted for 20 million dollars. This number is expected to rise to over 855 million by the year 2001.

The primary reason internet usage is currently low is the age of the population in Singapore. The majority of the residents of Singapore are baby-boomers. This generation grew up without computer exposure or training. Many of the older citizens don’t consider the internet as a viable source for doing business. However, as the world is doing more and more business online, attitudes are changing. The government has passed laws encouraging E-commerce, and the younger generations are recieving more computer training.

The government of Singapore is working hand in hand with information technology firms to create an environment in which E-commerce will thrive. Currently research is being done on improving connection speeds, developing new internet security systems, and making online payments safer and more secure.

Singapore is the first Southeastern Asian country to clearly define the responsibilities and rights of all parties in E-commerce. Two new bills are expected to be passed this year. The first bill will allow public sector services to be delivered to consumers electronically. The second bill, The Computer Misuse Bill, will increase penalties for hacker attacks and virus activities. Trade and Industry Minister Lee Yock Suan said, “A proper legal and policy framework will enable E-commerce transactions from around the world to be processed here in a secure and safe manner.”
Singapore has instituted a number of financial incentives for business willing to go online. These incentives include tax deductions and investment opportunities. The implementation of these incentives has made it easier for a company to manage the costs and risks of venturing into E-commerce.

Singapore’s current US connection of 45 Mbps is growing everyday. Local internet providers have begun expanding their connection speed and size through the use of satellite links. It is estimated that in the next ten years the number of internet connections in Singapore will almost be double what it is today.

Electronic Commerce is changing the way business is conducted today. Singapore has positioned itself to become a major part of the E-business trend. Developing technology, government support, and growing internet awareness make Singapore an ideal environment in which E-commerce can thrive. Lee Yock Suan sums up Singapore’s E-commerce environment by saying ,”We want to be plugged into this global development, and position Singapore as an international E-commerce hub.”
Rajakru, DangJournal of Contemporary Asia, vol 26, 1996, p. 3-27
The state, family and industrial development: the Singapore case.

Graham, MarkIndustry Week, vol 249 no 7, 2000,p. 37-40
Singapore lures technology: it’s clean, green — and a powerful machine.


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